JEFFERSON CITY – Missouri became the latest red state to reject President Donald Trump's offer to defer payroll taxes for thousands of state workers.
After reviewing the offer for five weeks, Republican Gov. Mike Parson's administration announced Monday it would not temporarily stop taking the 6.2% tax out of paychecks of people earning $4,000 or less per biweekly pay period beginning Sept. 1.
"We do not believe our state employees would be advantaged by doubling their tax obligations between January and April of 2021, in exchange for temporarily reduced taxes for three months this year. We reached out to a variety of business organizations, employers and other states to see if they were participating and most have elected not to participate. For these reasons we will not be participating in the payroll tax deferral," said Chris Moreland, spokesman for the Office of Administration, which oversees payroll and other operational issues for state government.
Other GOP-controlled states also are nixing the idea, including Arizona and Indiana.
Trump floated the deferral in August after congressional negotiations over a new coronavirus stimulus package ran aground. He said it could provide temporary relief for people affected by the pandemic.
For the 53,246 workers on the state's payroll, that would have amounted to an average monthly increase in their take-home pay of about $250 per month through the end of the year.
But, the taxes would be deferred, not eliminated, and people would have to repay them early next year.
In all, the state pays an average of $13.5 million each month in payroll taxes, which are used to fund Social Security. The state's next round of paychecks go out Sept. 15.
The payroll tax deferral has received an icy response from business and trade groups, who say it will create a significant tax liability for workers. They also worried about the time and expense of temporarily altering their payroll systems.
The state's decision to forgo the deferral comes after Parson jumped at the chance to pay an extra $300 per week to those on unemployment.
The Missouri Department of Labor was among the first states to apply for and received $200 million for the program, called Lost Wages Assistance. The Federal Emergency Management Agency approved Missouri's application on Aug. 16.
But, the money has already run out. Final payments will be paid by the end of the week.